Competition-induced punishment of winners and losers: Who is the target?

•We provide the first economic experiment on punishment after competition.•Winners and losers are punished by the outgroup similarly as by direct opponents.•Losers get punished more severely with winners' increasing score difference.•Losers get punished less by the ingroup. Winners face undifferentiated punishment.•Happiness is rather affected by the competitive outcome than by punishment.

We elicit punishment after competition. Our experiment creates a setting in which winners and losers are assigned in a pairwise speed-based calculation task. As in Abbink and Sadrieh's (2009) joy-of-destruction game punishment is executed by burning parts of another participant's endowment. We manipulate the target of punishment to investigate whether it is driven by discrimination of the direct opponent, the outgroup or by joy of destruction. Furthermore, we analyze the role that the clarity of victory or defeat plays for punishment after competition. Our findings suggest that losers face punishment from particularly dominant winners and-to a lesser degree-from particularly frustrated losers. Winners face undifferentiated punishment from all sides. Our results have implications for the prevention of destructive behavior within organizations which use competitions in order to induce effort.